Tight credit delays sale of Tenet medical offices

Tenet Healthcare Corp., Dallas, said that tighter credit has delayed its planned sale of its medical office buildings into 2009. The company also reported higher profits for the third quarter, thanks to the gain from selling its interest in a group purchasing organization, but commercial managed-care admissions were weak.

Tenet reported net income of $104 million compared with a loss of $59 million in 2007's third quarter. Revenue increased 5.7% to $2.16 billion. Tenet's overall admission results were goodwith same-hospital gains of 1.7% for admissions and 1.1% in outpatient visitsbut same-hospital, commercial managed-care admissions declined by 3.4% compared with the third quarters of 2007 and 2008. Tenet said anecdotal evidence points to a weak managed-care environment for all operators in its markets.

The bidding process for the company's medical office buildings was completed when financing dried up in September, Chief Financial Officer Biggs Porter said during a conference call with stock analysts. The sale of two Los Angeles hospitals to the University of Southern California also has been delayed because the due diligence process has taken longer than expected; in a letter of intent, USC tentatively has agreed to pay $311 million for the hospitals.

The company's results from the nine months ended Sept. 30net income of $58 million on revenue of $6.47 billionand the weakening economy led to the lowered expectations for earnings before interest, taxes, depreciation and amortization, the company said. Tenet expects EBITDA to be between $700 million and $750 million, down from a range of $750 million to $825 million that the company expected in August. "I can't recall a more difficult time to be predicting future results," Porter said. -- by Vince Galloro

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